Ratings Methodology

SQM Research high star rated funds have the strong foundations necessary to provide superior returns to adviser clients.

SQM's rating methodology incorporates a wide range of research elements that generally require up to approximately three months for completion.

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The model generates a product score, which correlates to a specific star rating up to a maximum of five stars.

The star rating spectrum allows products to be ranked within quarter star increments.

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Ratings Methodology

SQM's rating methodology incorporates a wide range of research elements that generally require up to approximately three months for completion. These elements include:

  • Detailed SQM Review Questionnaire, probing key areas including Business Profile, Investment Process and Performance, Fees, Key Staff, Governance and Risk
  • Comprehensive SQM Data Template covering a wide variety of key Fund positioning and portfolio criteria
  • Review of official documents such as PDS, Fund Constitution, statutory financial statements, and any other documents necessary to the rating process
  • In-depth meeting conducted with key people in the investment management team and relevant business-side executives (e.g. CEO, Head of Distribution)
  • Quantitative analysis conducted via the SQM Investment Dashboard, a proprietary web-based system developed internally to assess important Fund metrics

The assessment incorporates a combination of qualitative and quantitative research techniques to determine rating opinions on domestic and global products in the following categories: Alternatives, Fixed Income, Equities, Infrastructure, A-REITs, G-REITs, Direct Property, Mortgage Trusts, RMBS, ETFs, SMAs.

Information generated is passed through an assessment model at the completion of the research process. The model generates a product score, which correlates to a specific star rating up to a maximum of five stars. The star rating spectrum allows products to be ranked within quarter star increments.

Following are descriptions for each of the star ratings, developed as a guide for dealer group research teams and investment committees:

Ratings Definitions Update

Effective 15 December 2025, SQM Research has updated the definitions used in its ratings, as outlined below.

Ratings issued prior to 15 December 2025 remain available here: Previous ratings scale.

Ratings Summary

4.5 STARS & above

Highest Investment Grade

In SQM Research’s view, the Fund has substantial potential to meet its investment objectives (over the medium-to-long term). Most funds with this rating score highly for a significant majority of SQM’s key areas of assessment.

4.25 STARS

High Investment Grade

In SQM Research’s view, the Fund has considerable potential to meet its investment objectives (over the medium-to-long term). Most funds with this rating score highly for a majority of SQM’s key areas of assessment.

4 STARS

High Investment Grade

In SQM Research’s view, the Fund has considerable potential to meet its investment objectives (over the medium-to-long term). Most funds with this rating score highly for a majority of SQM’s key areas of assessment.

3.75 STARS*

Investment Grade

In SQM Research’s view, the Fund has the potential to meet its investment objectives (over the medium-to-long term). Most funds with this rating score reasonably well in some of SQM’s key areas of assessment, although SQM has identified some areas for improvement.

3.5 STARS*

Low Investment Grade

In SQM Research’s view, the potential of meeting its investment objectives (over the mediumto- long term) is uncertain. Most funds with this rating score reasonably well across a minority of SQM’s key areas of assessment, and SQM has identified some areas for improvement.

3.25 STARS

Non-Investment Grade

In SQM Research’s view, the potential of meeting its investment objectives (over the mediumto- long term) is very uncertain. Most funds with this rating do not score well across a majority of SQM’s key areas of assessment, and SQM has identified several areas for improvement.

3 STARS

Non-Investment Grade

In SQM Research’s view, the potential of meeting its investment objectives (over the mediumto- long term) is very uncertain. Most funds with this rating do not score well across a majority of SQM’s key areas of assessment, and SQM has identified several areas for improvement.

BELOW 3 STARS

Avoid

In SQM Research’s view, the potential of meeting its investment objectives (over the medium-tolong term) is highly unlikely. SQM Research has multiple material concerns surrounding the Fund.

WITHDRAWN

The rating is withdrawn and no longer applicable. Significant issues have arisen since the last report was issued, and investors should avoid or redeem units in the fund.

Discontinued – Withdrawn

The manager, after agreeing to be reviewed, has pulled out of the process and/or has not responded.

HOLD

Rating is suspended until SQM Research receives further information. A rating is typically put on hold for a period of two days to four weeks. Dealer groups should not be making further investments into this fund until SQM has completed its additional investigations.


* It is strongly recommended advisers conduct additional due diligence over and above base requirements when considering such rated funds.